Nurturing Product Innovation

Business Matters

Nurturing Product Innovation

The Tsengas family’s years of experience are behind OurPet’s success

Steve Tsengas understands the science behind pet products. And he should — prior to starting The OurPet’s Co. in 1995, he had founded and operated six companies in Lake County, in markets including electronics, thermoplastic and thermoset polymers and metal finishing.

By the mid-1990s, Tsengas wanted to combine his knowledge of electronics, plastics and other materials with his love of animals. So in 1994, he and his sons, Nick and Dean Tsengas, developed the product that would ultimately lead to the launch of OurPet’s.

“Our first product was a feeder for large-breed dogs,” Tsengas says. “With conventional bowls, large-breed dogs have to bend down further than smaller dogs, which can lead to arthritic joints as the dogs age, and to eating disorders.”

Tsengas and his sons developed an idea for an elevated dog bowl, constructed a prototype and debuted it at Cleveland’s Crown Classic Dog Show in December 1994. From $6,000 in sales that first month, they’ve grown the company to $25 million in annual sales and 68 employees working at the company’s two facilities in Fairport Harbor and Mentor.

“When we got into the industry, it was a $16 billion annual industry,” Tsengas says. “Now, it’s a $60 billion industry, and we’ve grown from that one dog feeder to about 1,000 SKUs, produced and distributed from 100,000 square feet of warehouse, office and production space at our two facilities. We also own additional acreage that we can develop as needed.”

The growth plan

The team at OurPet’s has developed a culture of innovation. In 20 years, the company has developed products that have led to 150 patents issued or pending. The products cover every area of pet care.

“We divide our products into three general areas,” Tsengas says. “One is feeding and storage products. The second is toys and accessories, which we produce primarily for cats and dogs. The third is waste and odor control. The price points of our products cover a wide range, from $2 to $3 for small toys, up to hundreds of dollars for an automatic cat litter box with infrared sensors that allow the box to scoop waste matter on its own.”

Tsengas’ background as a businessman and entrepreneur has taught him to never close the door on an opportunity unless you are absolutely sure it’s not the right fit for your company. That fact has played a large role in why OurPet’s has grown to include such a wide breadth of products.

“The lessons I learned really started before I became a full-time entrepreneur,” Tsengas says. “I worked for 15 years in technology companies, and it gave me tremendous experience in engineering, marketing, sales, strategic planning and manufacturing operations — all areas that have helped me in developing my companies. I learned that tenacity and a willingness to survey the landscape are very important factors in what makes a company successful.”

Tsengas’ background has also reinforced an ongoing desire to learn more. He had a bachelor of science degree in engineering and a master’s degree in business when he founded OurPet’s. But that wasn’t nearly enough for Tsengas if he was going to lead OurPet’s to become a leader in its space.

“I went back and earned my Ph.D. in natural health, with a specialization in pet geriatrics,” Tsengas says. “I wanted a thorough understanding of how animals age, and of animal health in general. And that was my doctoral thesis — slowing down aging in animals and improving the quality of life during the golden years. It’s helped me gain insight as we’ve developed new products and made high-level decisions regarding how we’re going to serve this market.”

Going to market

Tsengas, chairman and CEO, presently runs OurPet’s with his son, Dean, who serves as vice president and GM of operations. (Son Nick is no longer involved with the company.) Tsengas, his son and the rest of the OurPet’s leadership team sit down for annual strategic planning meetings, in which they review the company’s go-forward plan and make adjustments as necessary.

It’s a necessary step, because great product innovation works hand-in-hand with a successful market strategy. And OurPet’s has had to deal with a constantly evolving market. “We have to focus on meeting the needs of both pets and pet owners, and part of that is figuring out how to get our products to pet owners in a way that maximizes our exposure and maximizes convenience for them,” Tsengas says.

OurPet’s initially distributed product in national pet-specialty store chains such as PetSmart and Petco, but Tsengas and his team soon realized they were missing out on key traction areas in other store categories. In particular, Tsengas wanted to explore the food and drug retail spaces.

“When you go to a pet specialty store, you are only going there for pet products,” Tsengas says. “You might go to that type of store a couple times a month. But if you can get your pet products into supermarkets and drugstores, those are the types of stores that customers visit a couple times a week. We looked at that and saw a great opportunity to supply our products to customers.”

With a revised philosophy geared toward providing convenience for grocery shoppers, OurPet’s found a new path to growing its distribution footprint. The food and drug space now accounts for 50 percent of its retail distribution, with pet supply stores accounting for 40 percent of its bricks-and-mortar distribution and e-commerce for 10 percent of sales. E-commerce and export sales are growing faster than domestic sales.

Working with FirstMerit

To grow a business, you need a vision, you need innovation and you need a workable strategy to make it all happen. You also need financing, and FirstMerit Bank has been a critical partner for OurPet’s.

Tsengas has worked with FirstMerit to develop a longstanding relationship based on trust and transparency.

“We really try to treat them as a partner,” he says. “We give them a copy of our annual business plan, we give them our financial statements, and we feel very comfortable doing that because of the level of trust and familiarity we have with them. Our relationship with FirstMerit is one of clear communication and confidence.”

As a result of that transparency and trust, FirstMerit has extended a sizable line of credit to OurPet’s, which has allowed the company to capitalize on business and growth opportunities as they appear.

“Ten or 12 years ago, we had an opportunity with Walmart, which was already a major customer of ours at the time,” Tsengas says. “They had a major promotional pet product opportunity, and they chose us as the supplier. FirstMerit came in, worked with us and set us up with a short-term 90-day loan that allowed us to pay the vendor, and as soon as the item hit the dock, we were able to ship it to Walmart and draw on our line of credit and retire the short-term note. It was a great example of how FirstMerit works with its customers to find creative solutions.”

As an entrepreneur and an innovator, Tsengas appreciates a problem-solving mentality. And that’s exactly what FirstMerit has brought to the table for OurPet’s. “We are organized to be problem-solvers, and so are they,” he says. “We draw on our resources to create innovative solutions for pets and their owners, and FirstMerit does the same for us. They understand us and how we do business, and to me, that’s the definition of a great partnership.”

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